The current situation…

Vista lead to disappointing financial results for Microsoft in fiscal 08 and 09 and has made minimal encroachment into the corporate environment. Both the economic slowdown and the rumoured (and then turned real) dissatisfaction due to complexity and bugs with Vista provided reason for companies to defer upgrades from Windows XP; and since Windows 7 was rumoured to be released ever since 2007-ish, it made sense to put off any major investments both by homes and corporates.

Now that Windows 7 will come out with practically every newly sold PC, software vendors won’t support products on old systems for long. For businesses, investing in the newest operating system also comes with preferential technical support from Microsoft and sometimes decreased support for prior operating systems. So investing in Windows 7 seems like a solid systematic decision that will come with backup from Microsoft.

But wait, isn’t there a recession?

Yes. Yes there is. But that’s not always the determining factor in the success of a business. An important fact that far supersedes the current recession is that (according to chipmaker Intel) the average age of the enterprise PC is approaching 5 years. Where I work, we get new laptops every 2 years. So, the average of 5 years is a pivotal point that may be more than enough to boost PC and Windows 7 sales in the next year. Enterprises waited long enough and despite the recession, there has been a build up in demand for PCs, and therefore, for Windows 7 as well.

Although Microsoft’s earnings are known to be quite volatile due to the nature of their product offering, I see sales increasing and steady through 2010. Attached, of course, are stronger performance metrics from investors looking to fill their portfolio with some assured price appreciation and a decent 2% dividend for the next year or two.

PC Industry

What else is that the upcoming increase in PC sales and Windows 7 is likely to carry up the rest of the PC industry. This includes component makers, indirect and direct PC vendors, distributors and other areas of the PC supply chain. So make sure to stay vigilant for PC makers like Dell, Toshiba, Sony and HP, as well as chipmakers including Intel and AMD. They could easily benefit from big moves in the PC industry mentioned above.

Disclosure: no positions.

Image credit Robert Scoble under a Creative Commons license.